US TSYS/SUPPLY: Treasury Eyes Record TGA Size (Ex-Covid) Next Quarter

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(MNI) London – All timings are subject to change.

Monday 5 January:

• US-Venezuela: Deposed Venezuelan President Nicolás Maduro will appear in federal court in New York City at 12:00ET (17:00GMT, 18:00CET) alongside his wife, Cilia Flores. Both are set to be charged with narco-terrorism conspiracy, cocaine importation conspiracy and weapons offences. At 17:30ET (22:30GMT, 23:30CET) the congressional ‘Gang of Eight’, as well as the chair and ranking member of the House and Senate Armed Services and Foreign Relations/Affairs committees, will receive a classified briefing on the military operation that resulted in the capture of Maduro. Secretary of State Marco Rubio, Secretary of Defense/War Pete Hegseth, the Chair of the Joint Chiefs of Staff Gen. Dan Caine, CIA Director John Ratcliffe and Attorney General Pam Bondi are expected to attend. There has been pushback from Democrats and Republicans in Congress to President Donald Trump’s actions in approving the operation against Maduro without gaining congressional approval first. Before both of these events, a special UN Security Council meeting on the situation in Venezuela takes place in New York City at 10:00ET (15:00GMT, 16:00CET).

Minneapolis Fed President Kashkari, a 2026 FOMC voter, sounds patient on the prospect of future rate cuts in comments made Monday on CNBC. Overall based on his first remarks since the December FOMC meeting, we would continue to characterize his stance as just the 3rd most hawkish of this year's 4 rotating presidential voters (less hawkish than Cleveland's Hammack and Dallas's Logan, more hawkish than Philly's Paulson). Back in November he said that he wouldn't have supported the October rate cut, and we assume this meant he didn't support December's cut either.

• It sounds like if early-2026 inflation tariff passthrough from businesses does not prove to be too alarming, then he could plausibly support further cuts because there is a risk that unemployment could "pop" higher going forward.
• But he's also in no hurry to ease because the labor market looks relatively steady amid a consistently more resilient economy than had been expected, inflation remains too high, and he sees policy as around neutral already. Indeed he implies that the scope for cuts is limited and that he wouldn't rule out support for the next move being a hike depending on how the data unfolds.
• "The economy has proven to be far more resilient than I had expected...that tells me monetary policy must not be putting that much downward pressure on the economy. My guess is we’re pretty close to neutral right now." On balancing the Fed's dual mandate risks, Kashkari says that the FOMC needs to see more data before determining which of the inflation or the labor market mandates is at bigger risk of being missed, and then "move from a neutral stance whatever direction is necessary" (note the "direction" appears to be a matter of debate for him).
• He says "I think the inflation risk is one of persistence, that these tariff effects take multiple years to work their way all the way through the system, whereas I do think there's a risk that the unemployment rate could pop from here...We have two sides of our mandate... inflation is slowly trending down. The unemployment rate has gone from 3.6% to 4.6% so we're moving in the wrong direction on the labor market."
• Kashkari's outlook on the economy appears to consist of more-of-the-same on growth and the labor market. But he also echoes comments from other FOMC members in scrutinizing whether businesses will pass through tariffs to clients via price resets at the start of the year. He characterizes the main inflation debate on the FOMC as whether tariff-related price increases are persistent or a one-off.
• On inflation, "I've got a lot of confidence that housing services inflation... should continue to come down. Non housing services should be tied to wages, and wage growth is slowly trending down, so it's going to be slow... the tariff induced goods inflation - are we going to see a repricing in January of this year? A lot of businesses have said, there could be a repricing this year as they reset prices, that's something that we're going to need to watch."
• On growth, Kashkari reiterates that it keeps "surprising me how resilient growth is, and my expectation is the economy will probably continue doing what it's been doing, which is pretty resilient, pretty decent growth." On the labor market: "My expectation has continued low hiring but low firing."

• Date $MM Issuer (Priced *, Launch #)
• 1/05 $Benchmark United Mexican States 8Y +205a, 12Y +235a, 30Y +225a
• 1/05 $Benchmark Constellation Energy 2Y +80a, 2Y SOFR, 5Y +100a, 40Y +145a
• 1/05 $Benchmark Caterpillar 3pt details TBA